SJM broke ground yesterday on Lisboa Palace, which will
have as many as 700 gambling tables and 1,200 slot machines,
according to a statement. Scheduled to open in 2017, it will
have three hotels with 2,000 rooms, including a luxury hotel in
partnership with Italian fashion house Gianni Versace SpA.

The company founded by Macau tycoon Stanley Ho is expanding
in Cotai, Asia’s version of the Las Vegas Strip, to catch up
with companies including Sands China Ltd. (1928) and Galaxy
Entertainment Group Ltd. (27) that have resorts there. SJM, which
runs 20 of Macau’s 35 casinos, is the last of the Chinese city’s
six operators to get government approval to build on the isthmus
of reclaimed land that link the islands of Coloane and Taipa.

“We made the HK$25 billion estimate about a year ago,”
Ambrose So, Chief Executive Officer of SJM Holdings, said at the
press conference in Macau. “Now that the costs of construction
materials and labor have risen, we believe a HK$30 billion price
tag is more realistic.”

Lisboa Palace will initially be built on a 70,500-square-meter (760,000-square-foot) site. The company plans to buy a
stake in a neighboring plot controlled by Angela Leong, SJM’s
executive director and a Macau legislator, to triple the size of
the resort, Chief Executive Officer Ambrose So had said. The
company will finalize the deal within this year, he said
yesterday.

French Theme

The resort was modelled after Versailles, according to
WATG, the U.S.-based architectural design company employed for
SJM’s project. Sands China’s Venetian Macao is modelled after
the Italian city as is its parent’s Las Vegas casino, which was
also designed by WATG.

A French theme “resonates well” with customers from
mainland China, Grant Govertsen, a Macau-based analyst at Union
Gaming Group, said in a research note yesterday. “Mainland
consumers view Europe in general and France in specific as very
aspirational destinations.”

SJM fell 1.6 percent to close at HK$24.55 in Hong Kong
trading. The stock has climbed 20 percent in the past year,
compared with a 4.5 percent drop for the benchmark Hang Seng
Index. Sands China surged 62 percent while Galaxy more than
doubled in the same period.

The 180,000-square-meter expansion site, which has been
approved for non-gambling entertainment use, is owned by a
company controlled by Leong, who is also the mother of Ho’s
youngest children.

Ho, 92, held a casino monopoly in Macau for four decades
until 2002, when the government issued licenses to overseas
operators such as Sands and Wynn Resorts Ltd. (WYNN)

SJM is following the competitors, which built restaurants,
malls and family-friendly attractions in their resorts to draw
middle-class holiday-makers from mainland China to Macau. Casino
revenue in the city jumped 19 percent to $45 billion last year,
about seven times that of the Las Vegas Strip.